AIG Reports Fourth Quarter 2001 Net Income of $1.87 Billion.Business & Insurance Editors NEW YORK--(BUSINESS WIRE)--Feb. 7, 2002 American International Group
American International Group, Inc. (AIG) (NYSE: AIG; TYO: 8685 ) is a major American insurance corporation based in New York City. , Inc. (AIG AIG addressee indicator group (US DoD) AIG American International Group, Inc AiG Answers in Genesis (religious group in defense of Scripture) AIG Artificial Intelligence Group AIG Australian Industry Group ) today reported that its fourth quarter 2001 net income was $1.87 billion, compared to $1.80 billion in the fourth quarter of 2000. Core income increased 10.3 percent to $1.98 billion or $0.75 per share, compared to $1.79 billion or $0.68 per share in the fourth quarter of 2000. These 2001 results include $0.03 per share related to Enron Enron A U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made the firm become the seventh surety An individual who undertakes an obligation to pay a sum of money or to perform some duty or promise for another in the event that person fails to act. surety n. losses and a provision for Northridge earthquake The Northridge earthquake occurred on January 17, 1994 at 4:31 AM Pacific Standard Time in the city of Los Angeles, California. The earthquake had a "strong" moment magnitude of 6. claims. Following is a summary table of fourth quarter and full year information (in millions, except per share amounts).
FOURTH QUARTER TWELVE MONTHS
2001 2000(a) Change 2001 2000(a) Change
Net income,
as reported $1,865.9 $1,802.0 3.5 % $5,362.8 $6,638.9 (19.2) %
Core income(b) $1,978.4 $1,794.3 10.3 % $7,665.9 $6,785.8 13.0 %
PER SHARE RESULTS:
Net income,
as reported $ 0.70 $ 0.68 2.9 % $ 2.02 $ 2.52 (19.8) %
Core income(b) $ 0.75 $ 0.68 10.3 % $ 2.89 $ 2.57 12.5 %
Average shares
outstanding 2,645.4 2,638.6 2,649.9 2,637.8
(a) Restated to include American General Corporation acquired
August 29, 2001.
(b) See explanation of core income on next page. Core income
without the impact of Enron surety losses and 21st Century
earthquake losses, but including the American General home
services business amounts to $0.80 per share.
Core income is net income as reported adjusted to exclude the cumulative effect of accounting changes (principally related to EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation 99-20, "Recognition of Interest Income and Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. on Purchased and Retained Beneficial Interests in Securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. Financial Assets Financial assets Claims on real assets. "), realized capital gains (losses), acquisition, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and related charges, World Trade Center and related losses and the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of General home services business, which is being managed as a closed block. Core income includes AIG and Transatlantic Holdings, Inc. surety losses related to Enron of $57.2 million ($0.02 per share) and a provision for Northridge earthquake claims of $20.4 million ($0.01 per share). The following table provides a reconciliation between net income as reported and core income for the fourth quarter and full year 2001 compared to 2000:
FOURTH QUARTER
2001 2000(a)
Millions Per Share Millions Per Share
Net income,
as reported $1,865.9 $0.70 $1,802.0 $0.68
Cumulative effect
of accounting changes 0.0 0.00 0.0 0.00
Realized capital
losses(b) 181.0 0.07 60.9 0.03
Acquisition and
related charges 0.0 0.00 0.0 0.00
World Trade Center
and related losses 0.0 0.00 0.0 0.00
Less:
Home services business,
managed as a closed block 68.5 0.02 68.6 0.03
Core income $1,978.4 $0.75(c) $1,794.3 $0.68
TWELVE MONTHS
2001 2000(a)
Millions Per Share Millions Per Share
Net income,
as reported $5,362.8 $2.02 $6,638.9 $2.52
Cumulative effect of
accounting changes 136.2 0.05 0.0 0.00
Realized capital
losses(b) 541.7 0.21 214.4 0.08
Acquisition and
related charges 1,384.8 0.52 207.0 0.08
World Trade Center
and related losses 533.0 0.20 0.0 0.00
Less:
Home services business,
managed as a closed block 292.6 0.11 274.5 0.11
Core income $7,665.9 $2.89 $6,785.8 $2.57
(a) Restated to include American General Corporation acquired
August 29, 2001.
(b) Realized capital losses in 2001 include $69 million for the
impairment of certain Enron investments in the quarter and
full year.
(c) Core income without the impact of Enron surety losses and 21st
Century earthquake losses, but including the American General
home services business amounts to $0.80 per share in the
quarter.
Revenues for the year 2001 rose 10.2 percent to $63.24 billion from $57.37 billion in 2000. Fourth quarter revenues totaled $16.69 billion, an increase of 8.3 percent over $15.41 billion in the year earlier quarter. At December December: see month. 31, 2001, AIG's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: assets and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. approximated $490 billion and $52 billion, respectively. The following table outlines the impact of foreign exchange rates on property-casualty and life insurance premiums for the fourth quarter 2001:
Worldwide Foreign Worldwide Foreign
General General Life Life
Insurance Insurance Insurance Insurance
Premium Growth in
Original Currency 17.6 % 14.1 % 13.8 %(a) 17.2 %(a)
Foreign Exchange Impact (2.2) (7.2) (3.0) (5.6)
Premium Growth as
Reported in U.S.$ 15.4 % 6.9 % 10.8 % 11.6 %
(a) Premium income, deposits and other considerations. (See
supplementary data information.)
Commenting on these results, AIG Chairman M. R. Greenberg Green·berg , Joseph Harold Born 1915. American linguist. His influential works include Languages of Africa (1966) and Language Universals (1966). Noun 1. said, "AIG had a satisfactory fourth quarter and a strong full year 2001, a year of unprecedented challenges to our industry, nation and the global economy. "In the fourth quarter of 2001 core income increased 10.3 percent to $1.98 billion. These results included exposure to Enron surety bonds surety bond An insurance fee required before a duplicate security is issued to replace one that has been lost. The fee is approximately 4% of the market value of the security to be replaced. and a provision for Northridge earthquake claims, which together reduced core income by three cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . "Worldwide general insurance net premiums written grew 14.7 percent (17.5 percent in original currency) to $20.10 billion in 2001 and 15.4 percent (17.6 percent in original currency) in the fourth quarter to $5.20 billion. In the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , our Domestic Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. Group had record net premiums written of $11.24 billion, an increase of 27.7 percent in the year 2001 and $3.03 billion, an increase of 26.6 percent in the fourth quarter. The year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. renewal season brought significant new business to AIG, as companies sought to do business with the strongest insurers, and industry capacity was less readily available than a year ago. While renewal rates have trended higher, they still are not adequate in light of a decade of price erosion erosion (ĭrō`zhən), general term for the processes by which the surface of the earth is constantly being worn away. The principal agents are gravity, running water, near-shore waves, ice (mostly glaciers), and wind. in the property-casualty industry. "Our Foreign General business in the fourth quarter benefited from the same trends evident in the U.S. marketplace, although premium growth as reported was partially offset by the impact of a stronger U.S. dollar. "To help meet growing demand for property-casualty insurance, we have joined with other industry participants to make available significant additional insurance and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. capacity in Bermuda Bermuda (bûrmy  `də), British dependency (2005 est. pop. 65,400), 21 sq mi (53 sq km), comprising some 150 coral rocks, islets, and islands (of which some 20 are inhabited), in the by
forming Allied World Assurance Holdings, Ltd., to provide insurance
coverage to businesses with large and complex risks.
"HSB (Hue Saturation Brightness) A color space that is similar to the way an artist mixes colors by adding black and white to pure pigments. The pigments are the hues (H), measured in a circle from 0 to 359 degrees (0=red, 60=yellow, 120=green, 180=cyan, 240=blue, Group, Inc. had another good year and quarter and continues to be the industry leader providing equipment breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. insurance and related engineering and loss control services. "In Personal Lines, we continued in the fourth quarter to implement the auto insurance rate increases that are necessary to provide adequate returns. In New Jersey, the Department of Insurance has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: rate increases consistent with what an administrative law judge administrative law judge n. a professional hearing officer who works for the government to preside over hearings and appeals involving governmental agencies. They are generally experienced in the particular subject matter of the agency involved or of several agencies. had earlier ruled to be fair and appropriate. However, reported Personal Lines results in the fourth quarter were impacted by a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge of $50 million at 21st Century Insurance Group (AIG's share net of minority interest was $31 million pre-tax), to increase the provision for losses, following the unprecedented and potentially unconstitutional unconstitutional adj. referring to a statute, governmental conduct, court decision or private contract (such as a covenant which purports to limit transfer of real property only to Caucasians) which violate one or more provisions of the U. S. Constitution. decision by the State of California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). requiring all insurers to reopen re·o·pen tr. & intr.v. re·o·pened, re·o·pen·ing, re·o·pens 1. To open or be opened again: Officials reopened the airport after the snow was cleared. Schools reopen in September. claims in connection with the 1994 Northridge earthquake, nearly eight years after the occurrence. "United Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Corporation (UGC See user-generated content. ), our mortgage guaranty insurance subsidiary, had another very good quarter, benefiting from a robust housing market buoyed by low interest rates. "We added $141 million and $944 million to AIG's general insurance net loss and loss adjustment reserves for the quarter and full year, bringing the total of those reserves to $25.9 billion at year-end 2001. "Life insurance has been a growing contributor to AIG throughout 2001 as a result of continued international growth and the integration of our acquisition of American General Corporation, which closed in August. AIG's worldwide Life Division had an excellent full year and fourth quarter. Life operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before realized capital losses rose 13.6 percent for the year 2001 to $5.66 billion and increased 18.9 percent to $1.53 billion in the fourth quarter. "We had strong fourth quarter premium growth in Japan, the second largest market in the world for life insurance after the United States. In addition to ALICO ALICO American Life Insurance Company , AIG Star Life Insurance Co., Ltd., the business we acquired as part of the Chiyoda reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. , has been reconfigured and is contributing to our growing presence in Japan. In China, we received approval in the fourth quarter to expand our wholly-owned life business through American International Assurance American International Assurance known as AIA (美國友邦保險) is a famous insurance company based in Hong Kong. It has offices in Asia-Pacific region including China, Australia, New Zealand, Japan, India, Malaysia, South Korea, Thailand and Company, Ltd. (AIA AIA - Application Integration Architecture ) into four additional Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. cities - the capital city of Beijing Beijing (bā-jĭng) or Peking (pē-kĭng, pā–), city (1994 est. urban pop. 6,093,300; 1994 est. total pop. 7,240,700), capital of the People's Republic of China. It is in central Hebei prov. , Suzhou Suzhou, Soochow (both: s `jō`), or Wuxian (w , Dongguan and Jiangmen Jiangmen (江門, pinyin: Jiāngmén) is a prefecture-level city in Guangdong province in southern China with a population of about 3.8 million. HistoryThe port of Jiangmen was known as Kong-Moon when it was forced to open to western trade in 1902. . AIA is moving swiftly swift adj. swift·er, swift·est 1. Moving or capable of moving with great speed; fast. See Synonyms at fast1. 2. with its plans to commence operations in these new markets. Our life operations in Vietnam Vietnam (vēĕt`näm), officially Socialist Republic of Vietnam, republic (v), 128,400 sq mi (332,642 sq km), Southeast Asia. Occupying the eastern coastline of the Southeast Asian peninsula, Vietnam is bounded by China on the north, by Laos , which opened in 2000, and India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. , which commenced in 2001, are both off to promising starts. We already have over 6,000 agents in Vietnam and nearly 3,000 in India. "Following the August acquisition of American General, we are now ranked number two in the U.S. life insurance market, as well as a leader in markets around the world. We have been successfully integrating American General into AIG, implementing cross marketing programs that bring AIG products to the American General network, and capturing other valuable synergies and cost savings. With the combination of American General and SunAmerica, AIG is a leading provider of products designed to assist customers in financial and estate planning Estate Planning The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death. Notes: Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the and wealth transfer, through a broad portfolio of life insurance products, as well as fixed and variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. . AIG is now the number one provider of fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. in the United States. In the fourth quarter, our domestic life insurance premium income, deposits and other considerations grew 10.0 percent to $4.87 billion and 25.9 percent to $23.56 billion for the full year 2001. "The Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. Group had another good year and quarter. Operating income gained 18.4 percent to $588.8 million in the fourth quarter and 19.2 percent to $2.00 billion for the year. International Lease Finance Corporation (ILFC ILFC International Lease Finance Corporation ILFC International Lunar Finance Commission (TV show: Space: 1999) ) performed well in the quarter and year and continues to be a major contributor to the results of the Financial Services Group. The outlook for ILFC continues to be positive for 2002 as they have aggressively and successfully redeployed aircraft returned from distressed airlines to airlines in need of additional capacity. Since September September: see month. 2001, ILFC has placed for present and future delivery a total of 51 aircraft. "AIG Financial Products Corp. (AIGFP) had a good year in 2001 with operating income rising 16.9 percent to $758.3 million. AIGFP's income base is broadly diversified diversified (di·verˑ·s both as to product type and as to its client base, the governments, supranational Supranational An international organization, or union, whereby member states transcend national boundaries or interests to share in the decision-making and vote on issues pertaining to the wider grouping. entities and large credit worthy Worthy can refer to: People
A swap in which the cash flows exchanged are based on the total return on some stock market index and an interest rate (either a fixed rate or floating rate). Related: Interest rate swap. and options and specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. tax-based investments to the management of guaranteed investment agreements that it writes largely for U.S. municipal entities. AIGFP's triple- A ratings, based upon guarantees provided by AIG, make AIGFP a highly desirable counterparty Counterparty The other participant, including intermediaries, in a swap or contract. in today's credit sensitive markets. The market, credit and related exposures of AIGFP and AIG Trading Group Inc. are subject to detailed independent review by AIG's Credit Risk and Market Risk Management departments. We pay careful attention to credit quality and set exposure limits on counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. , industries and countries. "Our Consumer Finance business now has a major presence in the United States as a result of the American General acquisition. American General Finance has 1,350 branches in 44 states and serves more than 2 million customers. This strong domestic presence adds to the overall scope of AIG's worldwide consumer finance business. Consumer Finance operating income grew 28.8 percent to $512.6 million in 2001, and 22.2 percent to $126.9 million in the fourth quarter. "Our Asset Management business, as a result of the American General acquisition, now includes VALIC VALIC Variable Annuity Life Insurance Company , a leading provider of variable annuities through the not-for-profit Not-for-profit An organization established for charitable, humanitarian, or educational purposes that is exempt from some taxes and in which no one in profits or losses. and government distribution channels. Although sales of VALIC annuities were strong in the fourth quarter and full year 2001, fee income from the combined SunAmerica and VALIC variable annuities business declined as account values were depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. by the decline in the equity markets. Overall asset management income, which also includes AIG's investment management and private banking operations, amounted to $243.5 million in the fourth quarter, a decline of 26.1 percent, and $1.06 billion for the full year 2001, a decline of 8.7 percent from the prior year." GENERAL INSURANCE -- General insurance pretax income before realized capital gains (losses) for the year 2001 was $2.98 billion, compared to $3.49 billion last year. Excluding World Trade Center and related losses, pretax income before realized capital gains (losses) was $3.75 billion, 7.6 percent above last year. -- For the fourth quarter of 2001, general insurance pretax income before realized capital gains (losses) was $860.8 million, an increase of 0.7 percent compared to $855.2 million in 2000. -- Worldwide general insurance net premiums written for the year 2001 amounted to $20.10 billion, 14.7 percent ahead of the $17.53 billion in 2000. -- In the fourth quarter, general insurance net premiums written were $5.20 billion, an increase of 15.4 percent, compared to $4.50 billion last year. -- General insurance net investment income rose 7.1 percent to $2.89 billion in 2001 and 6.1 percent to $745.4 million in the fourth quarter. LIFE INSURANCE -- AIG's core worldwide life insurance operations reported pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern income before realized capital losses of $5.34 billion in the year 2001, an increase of 17.1 percent, compared to $4.56 billion in 2000. -- For the fourth quarter, core life insurance pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. before realized capital losses increased 20.7 percent to $1.43 billion, compared to $1.18 billion last year. -- Core worldwide life insurance results exclude World Trade Center and related losses and American General's home services business. Including World Trade Center and related losses and American General's home services business, AIG's worldwide life insurance operations reported pretax income before realized capital losses in 2001 of $5.66 billion, compared to $4.98 billion last year, and $1.53 billion and $1.29 billion in the fourth quarter of 2001 and 2000, respectively. -- For the year 2001 life insurance premium income, deposits and other considerations rose 14.0 percent to $44.03 billion from $38.62 billion in 2000. -- Fourth quarter premium income, deposits and other considerations amounted to $10.36 billion, a gain of 10.8 percent, compared to $9.34 billion in 2000. -- Life insurance net investment income rose 10.0 percent to $11.74 billion for the year 2001, compared to $10.66 billion last year. -- For the fourth quarter, net investment income amounted to $3.05 billion, an increase of 6.7 percent, compared to $2.86 billion in the same period last year. FINANCIAL SERVICES -- Financial services pretax operating income amounted to $2.00 billion for the year 2001, compared to $1.68 billion last year, an increase of 19.2 percent. -- For the fourth quarter, financial services operating income increased 18.4 percent to $588.8 million, compared to $497.3 million in 2000. ASSET MANAGEMENT -- Asset management pretax operating income amounted to $1.06 billion for the year 2001, compared to $1.16 billion last year, a decrease of 8.7 percent. -- For the fourth quarter, asset management operating income decreased 26.1 percent to $243.5 million, compared to $329.7 million in 2000. AIG is the leading U.S.-based international insurance and financial services organization and the largest underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. of commercial and industrial insurance in the United States. Its member companies write a wide range of commercial, personal and life insurance products through a variety of distribution channels in approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 130 countries and jurisdictions throughout the world. AIG's global businesses also include financial services and asset management, including aircraft leasing, financial products, trading and market making, consumer finance, institutional, retail and direct investment fund asset management, real estate investment management, and retirement savings products. American International Group, Inc.'s common stock is listed on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. , as well as the stock exchanges in London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. , Paris, Switzerland Switzerland (swĭt`sərlənd), Fr. Suisse, Ger. Schweiz, Ital. Svizzera, officially Swiss Confederation, federal republic (2005 est. pop. 7,489,000), 15,941 sq mi (41,287 sq km), central Europe. and Tokyo Tokyo (tō`kēō), city (1990 pop. 8,163,573), capital of Japan and of Tokyo prefecture, E central Honshu, at the head of Tokyo Bay. . Caution concerning forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release may contain forward-looking statements. Please refer to AIG's Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September 30, 2001 for a description of the business environment in which AIG operates and the important factors that may affect its business. AIG is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward- looking statements whether as a result of new information, future events or otherwise.
American International Group, Inc.
Financial Highlights
(in thousands, except per share amounts)
Three Months Ended December 31,
2001 2000(a) Change
General Insurance Operations:
Net Premiums Written $ 5,197,712 $ 4,502,919 15.4 %
Net Premiums Earned 5,055,894 4,785,517 5.6
Adjusted Underwriting Profit 115,379 152,854 (24.5)
Adjusted Underwriting Profit
excluding WTC Losses 115,379 152,854 (24.5)
Net Investment Income 745,430 702,307 6.1
Income before Realized
Capital Gains (Losses) 860,809 855,161 0.7
Income before Realized
Capital Gains (Losses)
excluding WTC Losses 860,809 855,161 0.7
Realized Capital Gains (Losses) 17,478 (3,860) -
Operating Income (includes
WTC Losses) $ 878,287 $ 851,301 3.2 %
Loss Ratio 78.81 76.16
Expense Ratio 20.93 22.65
Combined Ratio 99.74 98.81
Combined Ratio excluding
WTC Losses 99.74 98.81
Life Insurance Operations:
Premium Income, Deposits and
Other Considerations (b) $ 10,357,386 $ 9,343,771 10.8 %
Net Investment Income 3,047,950 2,857,080 6.7
Income before Realized
Capital Losses 1,532,359 1,288,304 18.9
Income before Realized
Capital Losses excluding
WTC Losses 1,532,359 1,288,304 18.9
Realized Capital Losses (250,161) (38,283) -
Operating Income (includes
WTC Losses) 1,282,198 1,250,021 2.6
Financial Services Operating Income 588,756 497,262 18.4
Asset Management Operating Income 243,484 329,656 (26.1)
Other Realized Capital Losses (54,456) (49,876) -
Other Income (Deductions) - net (221,006) (181,288) -
Acquisition, Restructuring and
Related Charges 0 0 -
Income before Income Taxes, Minority
Interest and Cumulative Effect
of Accounting Changes 2,717,263 2,697,076 0.7
Income Taxes 804,011 787,057 -
Income before Minority Interest
and Cumulative Effect of
Accounting Changes 1,913,252 1,910,019 0.2
Minority Interest, after tax -
Operating Income (48,911) (106,704) -
Minority Interest, after tax -
Capital Gains 1,540 (1,301) -
Income before Cumulative Effect
of Accounting Changes 1,865,881 1,802,014 3.5
Cumulative Effect of Accounting
Changes, net of tax (c) 0 0 -
Net Income, as reported 1,865,881 1,802,014 3.5
Core Income (d) $ 1,978,438 $ 1,794,268 10.3 %
Per Share - Diluted:
Net Income, as reported $ 0.70 $ 0.68 2.9 %
Core Income (d) $ 0.75 $ 0.68 10.3 %
Average Diluted Common
Shares Outstanding 2,645,445 2,638,649
Twelve Months Ended December 31,
2001 2000(a) Change
General Insurance Operations:
Net Premiums Written $ 20,100,896 $ 17,526,339 14.7 %
Net Premiums Earned 19,364,886 17,406,850 11.2
Adjusted Underwriting Profit 88,252 784,972 (88.8)
Adjusted Underwriting Profit
excluding WTC Losses 857,252 784,972 9.2
Net Investment Income 2,892,619 2,700,784 7.1
Income before Realized
Capital Gains (Losses) 2,980,871 3,485,756 (14.5)
Income before Realized
Capital Gains (Losses)
excluding WTC Losses 3,749,871 3,485,756 7.6
Realized Capital Gains (Losses) (129,642) 38,461 -
Operating Income (includes
WTC Losses) $ 2,851,229 $ 3,524,217 (19.1)%
Loss Ratio 79.55 75.28
Expense Ratio 21.16 21.45
Combined Ratio 100.71 96.73
Combined Ratio excluding
WTC Losses 96.74 96.73
Life Insurance Operations:
Premium Income, Deposits and
Other Considerations (b) $ 44,028,793 $ 38,620,844 14.0 %
Net Investment Income 11,735,400 10,663,707 10.0
Income before Realized
Capital Losses 5,660,132 4,983,884 13.6
Income before Realized
Capital Losses excluding
WTC Losses 5,791,132 4,983,884 16.2
Realized Capital Losses (254,394) (161,661) -
Operating Income (includes
WTC Losses) 5,405,738 4,822,223 12.1
Financial Services Operating Income 1,999,331 1,677,319 19.2
Asset Management Operating Income 1,060,075 1,161,258 (8.7)
Other Realized Capital Losses (452,304) (189,530) -
Other Income (Deductions) - net (708,353) (656,684) -
Acquisition, Restructuring and
Related Charges (2,016,529) (315,421) -
Income before Income Taxes, Minority
Interest and Cumulative Effect
of Accounting Changes 8,139,187 10,023,382 (18.8)
Income Taxes 2,339,140 2,970,765 -
Income before Minority Interest
and Cumulative Effect of
Accounting Changes 5,800,047 7,052,617 (17.8)
Minority Interest, after tax -
Operating Income (299,491) (402,327) -
Minority Interest, after tax -
Capital Gains (1,524) (11,392) -
Income before Cumulative Effect
of Accounting Changes 5,499,032 6,638,898 (17.2)
Cumulative Effect of Accounting
Changes, net of tax (c) (136,203) 0 -
Net Income, as reported 5,362,829 6,638,898 (19.2)
Core Income (d) $ 7,665,877 $ 6,785,768 13.0 %
Per Share - Diluted:
Net Income, as reported $ 2.02 $ 2.52 (19.8)%
Core Income (d) $ 2.89 $ 2.57 12.5 %
Average Diluted Common
Shares Outstanding 2,649,906 2,637,818
(a) Restated to include American General Corporation acquired
August 29, 2001.
(b) GAAP premium income was $5,177,304 and $19,243,302 for the
fourth quarter and twelve months 2001, respectively, compared
to $4,541,327 and $17,174,131 for the fourth quarter and
twelve months 2000, respectively.
(c) Represents the cumulative effect of an accounting change, net
of tax, related to FASB 133 "Accounting for Derivative
Instruments and Hedging Activities" and EITF 99-20
"Recognition of Interest Income and Impairment on Purchased
and Retained Beneficial Interests in Securitized Financial
Assets".
(d) Adjusted to exclude the cumulative effect of accounting
changes, realized capital gains (losses), acquisition,
restructuring and related charges, World Trade Center and
related losses and the American General home services
business, which is being managed as a closed block, net of
tax.
American International Group, Inc.
Supplementary Data
(in thousands)
Three Months Ended December 31,
2001 2000(a) Change
General Insurance Operations:
Net Premiums Written
Brokerage Division $ 3,032,708 $ 2,395,985 26.6 %
Personal Lines 595,072 642,008 (7.3)
Mortgage Guaranty 130,801 118,070 10.8
Total Domestic General 3,758,581 3,156,063 19.1
Foreign General (b) 1,439,131 1,346,856 6.9
Total 5,197,712 4,502,919 15.4
Operating Income (Loss) (c)(d)
Brokerage Division 494,419 511,285 (3.3)
Personal Lines (26,519) (5,793) -
Mortgage Guaranty 96,271 89,478 7.6
Intercompany Adjustments 5,831 13,204 -
Total Domestic General 570,002 608,174 (6.3)
Foreign General 290,807 246,987 17.7
Total $ 860,809 $ 855,161 0.7 %
Combined Ratio: (d)
Brokerage Division 102.29 101.35
Personal Lines 112.36 105.36
Mortgage Guaranty 47.61 44.98
Total Domestic General 102.01 100.18
Foreign General 94.29 95.07
Losses and Loss Expenses Paid $ 3,843,816 $ 3,538,320 8.6 %
Change in Loss and LAE Reserve 140,910 106,342 32.5
Losses and Loss Expenses Incurred 3,984,726 3,644,662 9.3
Net Loss and LAE Reserve 25,895,512 24,951,596 3.8
GAAP Underwriting Profit (d) 115,379 152,854 (24.5)
Life Insurance Operations:
Premium Income, Deposits and Other Considerations
Domestic
Life (e) 1,166,224 1,199,803 (2.8)
Annuities, Pension and
Investment Products (f) 3,699,352 3,224,652 14.7
Total 4,865,576 4,424,455 10.0
Foreign (g)
Life (e) 4,017,825 3,338,526 20.3
Annuities, Pension and
Investment Products (f) 1,473,985 1,580,790 (6.8)
Total 5,491,810 4,919,316 11.6
Net Investment Income
Domestic 2,057,010 1,989,661 3.4
Foreign 990,940 867,419 14.2
Total 3,047,950 2,857,080 6.7
Operating Income (c)(d)
Domestic
Other than Home Services 671,566 590,562 13.7
Home Services 105,247 105,632 (0.4)
Foreign 755,546 592,110 27.6
Total 1,532,359 1,288,304 18.9
Financial Services:
Revenues
International Lease
Finance Corp. 675,885 654,842 3.2
AIG Financial Products Corp. 375,343 344,209 9.0
Consumer Finance Group 656,600 607,319 8.1
AIG Trading Group Inc. 62,630 63,352 (1.1)
Other (13,499) (26,361) -
Total 1,756,959 1,643,361 6.9
Operating Income
International Lease
Finance Corp. 218,185 177,519 22.9
AIG Financial Products Corp. 233,785 215,595 8.4
Consumer Finance Group 126,893 103,866 22.2
AIG Trading Group Inc. 27,049 21,564 25.4
Other (h) (17,156) (21,282) -
Total $ 588,756 $ 497,262 18.4 %
Effective Tax Rates:
Excluding Capital Gains (Losses) 30.24% 29.38%
Capital Gains (Losses) Alone 36.44% 35.22%
As Reported 29.59% 29.18%
Twelve Months Ended December 31,
2001 2000(a) Change
General Insurance Operations:
Net Premiums Written
Brokerage Division $ 11,244,827 $ 8,805,428 27.7 %
Personal Lines 2,453,571 2,509,806 (2.2)
Mortgage Guaranty 494,398 453,397 9.0
Total Domestic General 14,192,796 11,768,631 20.6
Foreign General (b) 5,908,100 5,757,708 2.6
Total 20,100,896 17,526,339 14.7
Operating Income (c)(d)
Brokerage Division 2,152,505 2,010,017 7.1
Personal Lines 21,657 76,497 (71.7)
Mortgage Guaranty 417,436 363,118 15.0
Intercompany Adjustments 23,316 76,792 -
Total Domestic General 2,614,914 2,526,424 3.5
Foreign General 1,134,957 959,332 18.3
Total $ 3,749,871 $ 3,485,756 7.6 %
Combined Ratio:(d)
Brokerage Division 99.51 100.07
Personal Lines 104.89 100.84
Mortgage Guaranty 36.90 40.92
Total Domestic General 98.22 97.94
Foreign General 93.10 94.09
Losses and Loss Expenses Paid $ 14,461,669 $ 12,987,803 11.3 %
Change in Loss and LAE Reserve 943,916 116,589 709.6
Losses and Loss Expenses Incurred 15,405,585 13,104,392 17.6
Net Loss and LAE Reserve 25,895,512 24,951,596 3.8
GAAP Underwriting Profit (d) 857,252 784,972 9.2
Life Insurance Operations:
Premium Income, Deposits and Other Considerations
Domestic
Life (e) 4,508,677 4,412,641 2.2
Annuities, Pension and
Investment Products (f) 19,047,249 14,290,850 33.3
Total 23,555,926 18,703,491 25.9
Foreign (g)
Life (e) 15,000,408 12,718,031 17.9
Annuities, Pension and
Investment Products (f) 5,472,459 7,199,322 (24.0)
Total 20,472,867 19,917,353 2.8
Net Investment Income
Domestic 8,082,666 7,466,551 8.3
Foreign 3,652,734 3,197,156 14.2
Total 11,735,400 10,663,707 10.0
Operating Income (c)(d)
Domestic
Other than Home Services 2,600,940 2,323,964 11.9
Home Services 450,297 422,394 6.6
Foreign 2,739,895 2,237,526 22.5
Total 5,791,132 4,983,884 16.2
Financial Services:
Revenues
International Lease
Finance Corp. 2,612,822 2,440,974 7.0
AIG Financial Products Corp. 1,177,745 1,055,459 11.6
Consumer Finance Group 2,559,743 2,325,233 10.1
AIG Trading Group Inc. 170,465 253,551 (32.8)
Other (35,743) (121,804) -
Total 6,485,032 5,953,413 8.9
Operating Income
International Lease
Finance Corp. 749,137 653,925 14.6
AIG Financial Products Corp. 758,278 648,388 16.9
Consumer Finance Group 512,588 398,091 28.8
AIG Trading Group Inc. 48,065 62,141 (22.7)
Other (h) (68,737) (85,226) -
Total $ 1,999,331 $ 1,677,319 19.2 %
Effective Tax Rates:
Excluding Capital Gains (Losses) 29.36% 29.80%
Capital Gains (Losses) Alone 35.41% 35.08%
As Reported 28.74% 29.64%
(a) Restated to include American General Corporation acquired
August 29, 2001.
(b) The growth in foreign net premiums written in original
currency was 14.1 percent and 11.2 percent for the fourth
quarter and twelve months of 2001, respectively.
(c) Operating income excludes realized capital gains (losses).
(d) Twelve months 2001 excludes World Trade Center and related
losses.
(e) Includes traditional life, interest sensitive and variable
life products.
(f) Quarterly fluctuations in the sale of investment products do
not represent a trend for the year.
(g) The growth in foreign life premiums in original currency was
27.1 percent in the quarter and 26.8 percent for the twelve
months. Foreign annuities, pension and investment products in
original currency declined 3.9 percent for the quarter and
18.2 percent for the twelve months, impacted by a decline in
sales of tax-driven Guaranteed Income Bonds in the U.K.
(h) Includes Other Financial Services Companies and Intercompany
Reclassifications.
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